August 17, 2021

Decentralized finance (DeFi), currently poses a major hacking risk to the sector due to the vulnerability of DeFi sites to crime.

DeFi is a blockchain-based form of financing that does not rely on key financial intermediaries such as brokers, exchanges, or banks to provide traditional financial instruments, but instead uses smart blockchain contracts.

According to crypto-intelligence firm CipherTrace, thieves, hackers and fraudsters stole $474 million from various DeFi platforms between January and July, and this spike, which targets DeFi platforms, came as funds poured into DeFi.

Centralized exchanges, which act as intermediaries between buyers and sellers of crypto, used to be the main targets of crypto thefts and hacks. Now attackers and criminals are exploiting flaws in the open-source code used by websites, and because the rules are still patchy and the terms unclear, tracking and catching criminals remains a difficult challenge.

For some analysts, regulation is needed to address this problem.

For more information, read the original story in Reuters.